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In the past, savvy investors have used UGMA/UTMA accounts, among other vehicles, to save for higher education. However, many have said that they would be more inclined to save for a student's college education with a 529 plan once they were aware of the program and understood its benefits. CollegeBoundfund offers distinct advantages over UGMA/UTMA accounts and Coverdell Education Savings Accounts.*   CollegeBoundfund UGMA/UTMA Coverdell Education Savings Account* Contribution Maximum Contribution Per Account $365,000 per beneficiary over the life of the account Unlimited, subject to Annual Maximum Contribution per donor (see below) $2,000 per year (contributions generally must stop when child turns 18) Annual Maximum Contribution Per Donor $65,000 per beneficiary in the first year of a five-year period to avoid federal gift tax consequences ($130,000 per married couple) $13,000 per beneficiary per year to avoid federal gift tax consequences $2,000 per account per year Limitiations Limitations on Income None None Adjusted Gross Income(AGI) Limits Apply Age Limitations None Contributions must generally cease when child reaches age of majority No contributions after age 18. All distributions must generally be made by age 30 Earnings Account Earnings No tax on earnings while they remain in the account Taxable if child is underage 18, earnings over $1,700 generally taxed at parents rate No tax on earnings while they remain in the account Qualified Use of Proceeds Any accredited post-secondary program in the U.S. and some overseas Limited to expenses for child only-can not be used for parent's expenses Any accredited program in the U.S. and some overseas (in 2002, includes K-12) Management Funds Managed by AllianceBernstein L.P. Yes May be May be Investment Options Investment Options Variety of portfolios of top-selling AllianceBernstein mutual funds Variety of securities Variety of securities Donor/Beneficiary Funds Removed From Donor's Estate Yes. Subject to an “add-back” rule in the event of the donor's death within five years Generally no if the donor dies while acting as custodian Yes Donor May Change Beneficiary at Any Time Yes No Yes Attribution of Assets for Financial Aid Purposes Account owner Student Student Withdrawals Control of Withdrawals Account owner only Transfers to child when child reaches age of majority May be transferred to child when child reaches age of majority Penalties for Non-qualified Withdrawals 10% federal tax penalty on earnings only No 10% federal tax penalty on earnings only Taxation of Qualified Withdrawals Distributions for qualified education expenses are federal income tax free. Sale of account assets may trigger capital gains or other taxes to custodian or child Federal income tax-free Fees Fees to Setup and Maintain Minimum contribution needed to open an account will be $1,000.†   $25 annual fee waived if account is over $25,000 or if automatic contributions are made Varies Varies *Formerly Education IRA. †The minimum contribution for Rhode Island accounts (and certain other accounts subject to the same sales and asset-based charge structure as applies to Rhode Island accounts) is only $250. You should consider the investment objectives, risks, charges and expenses of the CollegeBoundfund carefully before investing. For a free copy of the Program Description, which contains this and other information, visit our Literature and Forms section, or call your financial representative or AllianceBernstein at (888) 324-5057. Please read the Program Description carefully before you invest. If you are not a Rhode Island resident or if you have taxable income in another state, consider whether that other state offers a similar plan with favorable state income tax or other benefits not available if you invest in the CollegeBoundfund. Statements in this material concerning taxation are not offered as individual tax advice. Investors should consult with their tax advisor or contact their state tax division for more information before investing. The investments in CollegeBoundfund are not guaranteed by the State of Rhode Island, the Rhode Island Higher Education Assistance Authority (which established and implemented CollegeBoundfund and makes rules and regulations governing the program), the Rhode Island State Investment Commission (which oversees the investments of the assets of CollegeBoundfund), the Federal Deposit Insurance Corporation (FDIC) or any instrumentality thereof. CollegeBoundfund is managed by Alliance Capital Management L.P. and distributed by AllianceBernstein Investment Research and Management, Inc., member of FINRA.